Sunday, May 2, 2010

Oh Henry! The Tax Review that’s a bit chewy

Today at 2:30pm all the journalists from the Canberra Press Gallery were released from the four hour lock up they had endured at Parliament House to go through the Henry Tax Review. If you want to know what’s in it, you can click on any number of the stories below.

What I’m interested in is that these journalists have had four hours to go through a 1000 odd pages (or at least the executive summary if they are lazy!) and then write a story to be filed as soon as possible. Given that journalists try to capture the story in the first paragraph (the old 5 W’s rule – the who, the what, the where, the when, and the why), I’m going to have a look at the initial reactions by various journalists. Of course the journalists don’t write the headings for the stories, but they are also interesting for seeing how the media are looking at viewing the story – each of the headings will link to the full story that will give the fuller coverage).

The story will no doubt change throughout the day and into tomorrow. No doubt given the 138 recommendations, and the small number that have been completely adopted by the Government, expect a few “they squibbed it” articles. But bear in mind, the Henry Tax Review was meant to be a long term view. How long term? Well remember that in 1975 the Asprey Review of the taxation system recommended a consumption tax – that took over 20 years to be introduced.

The long term tax plan we announce today will strengthen the economy and make the tax system fairer and simpler for Australian working families and businesses.

Pretty meaningless.

At this time the Libs don’t have a media release on the website, but Laurie Oakes reported that Abbott and Hockey were waiting for journalists outside the lock up and both said it’s “One great big tax”, which just shows they are the most indolent opposition in recent memory.

Millions of Australians are set to reap higher retirement savings as the Federal Government makes major changes to the country's superannuation system in response to the much-anticipated Henry tax review.

Pretty positive report for the Government. Big focus on the two key aspect of the review – the 40% mining tax and the increase to 12% of the superannuation guarantee (something not recommended by the Henry Review).

The resources sector will be slugged with a 40 per cent “resources super profit tax”, super contributions will rise to 12 per cent and company taxes will fall under changes to the tax system adopted by the Federal Government in the wake of the Henry tax review.

Another focus on the 40 percent miners and the 12 percent super. Use of “slugged” is a bit tabloidy, but he gets the big ticket information out there quickly.

A NEW 40 per cent tax on windfall mining profits will pay for a 3 per cent boost to the superannuation guarantee for workers and a 2c in the dollar reduction in the company tax rate, under the Rudd government's politically cautious response to the Henry review of the taxation system released today.

A good summation – throws in a bit of a comment “politically cautious” that doesn’t go over the top; certainly has me wanting to read more.

Now Tim Lester for the Fairfax, SMH and The Age:

Big profits from mining boom to pay for boost in retirement savings

TIM LESTER NATIONAL BUREAU CHIEF

Australians will receive billions of dollars in extra retirement savings through an overhaul of superannuation.

Yeah ok. But the heading just about gives more detail that the opening “paragraph”.

KEVIN Rudd has launched a pre-election salvo that seeks to deliver Labor a second term by promising to redistribute the nation's wealth by taxing the profits of big mining and boosting the retirement savings of millions of Australians.

The Government would be happy with those stories and headlines. The final one focuses most on the politics of the tax review. It is the problem with long term tax reviews that they have to be implemented within the short-term world of Australian politics.

Well this won’t do much to dispel the impression of a cautious, indeed risk-averse, government.

Keane’s mission is to focus on the politics, and he does it quickly. Essentially he views the Govt’s response to Henry as confirmation that Rudd is more Bob Carr than Bob Hawke (let alone Whitlam). Keane’s views as a cynical ex-public servant are better revealed in a tweet he wrote:

Henry Review: a comprehensive plan for a tax system that encourages growth and sustainability. No politician will ever touch most of it.

The team of five headed by Treasury Secretary Ken Henry has produced 138 recommendations that make up a compellingly comprehensive vision for Australia’s future tax and transfer system. It is a great document – probably the best tax review ever produced in this country.

Kohler is a pure economics-policy wonk. He would prefer to see all 138 recommendations implemented regardless of the political consequences. Similar is the view of Peter Martin:

They're pretty unrelated. The Henry Review is here. The government's response is at futuretax.gov.auAside from the Resources Rent Tax, renamed the Resource Super Profits Tax, there's little relation between the two. And don't hold out hope for much more.

Martin, like Kohler, would love the actual Henry Review – expect them both to keep calling for its recommendations to be implemented over the next decade.

And finally there is the Australian Financial Review (not sure who wrote it):

Resources hit in Henry review

Reforms to superannuation including a lift in the superannuation guarantee charge from 9 per cent to 12 per cent, infrastructure spending and a lower company tax rate would be funded by a new 40 per cent federal resource rent tax under sweeping reforms proposed by the federal government on Sunday in its response to the Henry tax review.

The Government would love to read phrases like “sweeping reforms”.

So there’s the quick view of “the Henry” from the media on the web. Obviously most people will get their info from the 6pm news reports, but it;s pretty obvious the big line is the mining tax and superannuation levy.

I look forward to reading some more in depth assessments of the Review itself.